My No. 1 High-Yield Stock for 2019

After producing market-crushing returns for much of its first decade as a public company -- including in 2017 -- Brookfield Infrastructure Partners (NYSE: BIP) took a step backward in 2018. Shares of the global infrastructure giant have slumped more than 20% through late December, weighed down by its stalled growth engine and the stock market's late swoon.

But while 2018 was a rough year for its investors, 2019 could be much better. That's because the company spent the past several months refueling its growth engine, which positions it to deliver much stronger returns in 2019. Add that upside potential to its 5.3%-yielding dividend, and Brookfield Infrastructure Partners could resume its market-beating ways in the coming year.

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What went wrong in 2018

Brookfield entered 2018 with muted expectations. The company was coming off a red-hot year, fueled by the needle-moving acquisition of a pipeline system in Brazil. The energy from that deal, however, would begin wearing off in early 2018 since the company closed that acquisition in April of 2017, meaning it would no longer juice its year-over-year results.

Meanwhile, Brookfield agreed to sell its electric transmission business in Chile for $1.3 billion in December of 2017, which would hurt results until the company reinvested those proceeds. While the company noted at the time that it had a large backlog of expansion projects under construction and a robust pipeline of acquisition candidates, it would take time before they would boost its results.

Why a reacceleration appears to be just over the horizon

In the months since closing that sale, Brookfield has gone on to secure six acquisitions, and it expects to invest $1.8 billion in these opportunities. The company is acquiring a stake in Colombia's second-largest gas-distribution system, data centers in both the U.S. and Brazil, Enbridge's (NYSE: ENB) natural-gas gathering and processing (G&P) business in Western Canada, a North American residential energy infrastructure business, and a gas pipeline in India.

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Brookfield has already closed the first phase of its deal with Enbridge as well as its investments in the North American residential energy infrastructure business and the Colombian gas distribution company. The company also expects to close its joint venture for the data centers in Brazil with Digital Realty by year end, and its U.S. data center partnership with AT&T by early next year. Lastly, it anticipates closing the second phase of its acquisition of Enbridge's Western Canadian G&P business as well as the pipeline in India by the middle of next year.

Once all these deals close, they should expand Brookfield's funds from operations (FFO) -- a proxy for cash flow -- from its current annualized run rate of $3 per unit up to $3.60, or a 20% increase. From there, the company anticipates that it can expand FFO per unit at a 6% to 9% annual pace without additional acquisitions, though the company is on the lookout for more deals. Driving the company's organic growth will be expansion projects across its footprint as well as volume-based and inflationary growth. That steadily rising cash flow should enable the company to increase its high-yielding distribution to investors at a 5% to 9% annual rate.

All the makings of a market-beating stock

With units of Brookfield recently trading for around $35.50 after selling off this year, it implies that the company sells for less than 10 times the FFO it can generate once it closes its remaining transactions. That's a dirt-cheap price for a solid company with such visible growth prospects, and well below the mid-teens valuation Brookfield routinely fetches.

Add the upside potential as the company's valuation improves to its high yield, and investors could potentially earn a more than 25% total return in the coming year. That compelling total-return potential is why Brookfield Infrastructure Partners tops my list of high-yield opportunities to buy in 2019.

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